Not exact matches
Previously, the Bank
of Canada hinted it might raise rates to curb the borrowing binge, but in March it abruptly
changed tack by affirming the
household debt - to - income ratio is «stabilizing near current levels.»
While $ 1.3 trillion won't do much to
change the outlook for inflation or future
debt crises, it sure would give a lot
of households one last chance to set things on a more positive course.
However, this is
changing, and the increase in the level
of household debt over the past decade is a major shift, with significant knock - on implications for consumption.
While such a rate
of expansion will clearly not be sustainable in the longer run, there is little sign at this stage that the appetite for borrowing has been restrained by the recent increases in interest rates, even though the higher
debt burden
of households might be expected to make them more responsive to interest rate
changes.
That will
change soon, if Poloz can shake off some
of the concerns that, as he acknowledged in a speech last week, keep him «awake at night» — such as record - high home prices and
household debt, lagging youth employment and cyber threats that could disrupt Canada's financial system.
These
changes have resulted in a significant upward shift in the ratio
of household debt to GDP, and thus a period
of above - average credit growth.
Even if we judge that the incidence
of this extreme reaction will still be relatively low, are there other forms
of behaviour which are likely to have
changed as a result
of the higher
debt - servicing ratio and higher gearing among indebted
households?
In a country where consumers have grown accustomed to low rates, and where
households are burdened with record levels
of debt relative to income, this kind
of change is worth noting.
Changes in 2018 will centre on a housing correction, with tackling
household debt being Bank
of Canada's main focus.
Homesteading weblog Off the Grid News suggests that if 20 %
of your monthly net income is less than the payments on your non-mortgage
debt you may need to look into restructuring your
debt, taking on additional work, or radically
changing your spending patterns to get your
household balance sheet back on track.
The Bank highlighted that
household debt ratios will continue to rise, but these will be mitigated over time by the announced
changes to housing finance rules.Even before the unanticipated rise in mortgage rates in October, the Bank revised down its economic forecast in large measure because
of the federal government's new initiatives «to promote stability in Canada's housing market».
Taking on new
debt, even for furniture or other
household related items, will
change the state
of your credit and add additional
debts that leads to the loss
of your mortgage approval.
Our model lowered everybody's
debt, built relationship, nurtured local resilience, and essentially put in motion all the projects that every
household should be doing right now to avert the worst
of climate
change.
Changing interest rates, new Canadian mortgage rules, and higher
household debt leaving much
of the market uncertain.
The regulatory regime states that these
changes are a result
of the confluence
of high
household debt, and high real estate prices, and low interest rates in Canada.
Demographics, supply, demand, migration, regulatory
changes, population growth, home prices, interest rates,
household debt, employment... All
of these and more are impacting the local and national housing markets.